Skip to content
Learning that drives better investment decisions

Become a Better Investor Newsletter – 22 April 2023

| |

Noteworthy this week

  • US credit crunch has likely begun
  • Bank deposits are just falling back to trend
  • The big banks increase their dominance
  • USD headed for a bear market
  • Being long-term is an edge

US credit crunch has likely begun: American businesses have more difficulty getting loans. A credit crunch increases the likelihood of a recession.

Bank deposits are just falling back to trend: It has been a lot of focus on falling bank deposits following the SVB failure, though, according to this chart, it looks like we’re heading back to the trend after the massive covid injection.

The big banks increase their dominance: Following the bank failures in the US, the larger banks benefit and see inflows at the cost of smaller banks.

USD headed for a bear market: The USD has begun its fourth bear market in the past 50 years, according to BofA. Time will tell if they’re right.

Being long-term is an edge: A long-term view on investing improves performance. Given the chart below, it may have become an even larger edge.

Join the world’s toughest valuation training

Become a Valuation Expert. Valuation Master Class Boot Camp graduates can confidently value any company in the world and possess in-demand industry skills.

Click here to learn more.

Weekly market performance

Click here to see more markets and periods.

Chart of the week

Discussed in the Become a Better Investor Community this week

“Update: Asia FVMR Portfolio

Since its inception, it has generated a before-fee total return of 106% versus the MSCI Asia ex Japan of 61%.

Update: ASEAN FVMR Portfolio

Since its inception, the portfolio has generated a before-fee total return of 177% versus MSCI ASEAN’s 27%.”

Try 1 month of the Become a Better Investor Community for FREE today!
You can cancel at any time. Click here to learn more.

Podcasts we listened to this week

The Jordan B Peterson Podcast – Your Dark Side and Control Over Your Life | Robert Greene | EP 237

“This episode focuses on human nature and the principles surrounding strategy, power, and seduction with Robert Greene. We also discuss the motivations behind power, deceptive strategies, Robert’s many jobs before settling as an author, psychopathy, manipulation, agreeableness, feeling guilt over being ambitious, channeling your shadow, and much more.”

Check it out on YouTube

Readings this week

Equity Risk Premiums (ERP): Determinants, Estimation and Implications – The 2023 Edition

“The equity risk premium is the price of risk in equity markets, and it is not just a key input in estimating costs of equity and capital in both corporate finance and valuation, but it is also a key metric in assessing the overall market.”

Read the paper

Book recommendation

Livewired: The Inside Story of the Ever-Changing Brain by David Eagleman

“The greatest technology we have ever discovered on our planet is the three-pound organ carried in the vault of the skull. This book is not simply about what the brain is; it is about what it does. The magic of the brain is not found in the parts it’s made of but in the way those parts unceasingly reweave themselves in an electric, living fabric.”

Get the book on Audible or Kindle.

Audible is great; have you tried it? If not, click here to get 2 books for free.

Memes of the week

New My Worst Investment Ever episodes

ISMS 20: Larry Swedroe – Do You Extrapolate From Small Samples and Trust Your Intuition?

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this third episode, they talk about mistake number three: Do you believe events are more predictable after the fact than before? And mistake number four: do you extrapolate from small samples and trust your intuition?

LEARNING: Know your investment history. Don’t be subjected to confirmation or recency biases.

Access the episode’s show notes and resources

Ep675: Larry Shumbres – Invest in What You Know and Is Regulated

BIO: As an accomplished entrepreneur and respected leader in the fintech industry, Larry Shumbres’s mission is to continuously enhance the investing experience for both advisers and investors through innovative technology.

STORY: Larry tried to create a hedge fund, 50% tied to digital gold and 50% tied to the top five cryptocurrencies but faced so many setbacks in the process. He spent too much time and money on this venture, which never paid off.

LEARNING: Don’t try to build an investment product around an unregulated industry. Don’t invest in what you don’t know.

Access the episode’s show notes and resources

Ep674: Jesse Felder – Don’t Rationalize a Lousy Trade

BIO: After starting his career at Bear Stearns and then co-founding a multi-billion-dollar hedge fund firm, Jesse Felder left Wall Street to focus his energies on research and writing. Today he publishes The Felder Report and hosts the Superinvestors podcast.

STORY: Jesse found a cigar butt stock that was cheap and performed extraordinarily well in just a few months after he took a pretty sizable position. A friend convinced him to hold the stock long-term instead of short-term as he had planned. Government legislation affected the business, and Jesse lost about 50% of his investment.

LEARNING: Don’t rationalize a bad trade; get out. Be very careful when you’re in a situation that’s being primed by the government.

Access the episode’s show notes and resources

ISMS 19: 5% March 2023 CPI Could Fall to 4% By Year-End; If Oil Doesn’t Fly

Remember that CPI is not inflation

  • Mar 2023 US CPI was 5%, down from 6% in Feb and off its June 2022 peak of 9.1%
  • Mar 2023, the food component was up 8.5% but has come off its Aug 2022 11.4% peak
  • Mar 2023, the energy component was down 6.4, a massive fall from its 41.6% June 2022 peak
  • In Mar 2023, all other items were flat MoM at 5.6%, down from Mar 2022 6.5% high
  • Without a surge in oil US, we forecast CPI could end 2023 at 4%

Download the PDF with all charts and graphs

Access the episode’s show notes and resources

Ep673: Sachi Wickramage – Target the Customer With the Problem at Scale

BIO: Sachi Wickramage is the Co-founder, COO & CPO of i4T Global, a disruptive Field Service Management ecosystem.

STORY: Sachi and his partner created an app that they thought would solve a problem for suppliers. Turns out, the suppliers didn’t need the app at all.

LEARNING: Sometimes, you have to take a step back to take a step forward. Understand the moment of intent for each of your customer segments.

Access the episode’s show notes and resources

Published on Become a Better Investor this week

With this episode, Andrew and David P. Langford start a new series on the Role of the Manager in Education.

Listen to Define the System and the Aim: Role of a Manager in Education (Part 1)

In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss a chapter of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this second episode of the series, they talk about mistake number two: Do you project recent trends indefinitely into the future?

Read ISMS 17: Larry Swedroe – Do You Project Recent Trends Indefinitely Into the Future?

Erawan Group Public Company Limited (ERW TB): Profitable Growth rank of 10 was same compared to the prior period’s 10th rank. This is poor performance compared to 880 medium Cons. Disc. companies worldwide.

Read Erawan Group – World Class Benchmarking

What’s interesting about FedEx is that its margin is half of its main competitor UPS.

Read Can FedEx Hit $300 Again?

Emerging Countries – China and Russia with stable rates, LT rates up only slightly, yield curve inversion less severe except Russia.

Download the PDF with all charts and graphs

Read ISMS 16: Top 5 EM Country Interest Rates – Normal China Yield Curve

DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article.

Posted in Newsletter